An antidote to the litany of "The Blockchain, not Bitcoin" - April 6 has appeared a book for the least singular, fully in English and (for now?) Not translated into our French-speaking countries. "The Bitcoin Standard" is an uncommon text in burgeoning literature dealing with the sphere of cryptocurrencies.
Written by Saifedean Ammous, assistant professor of economics at Lebanese American University, "The Bitcoin Standard" is different from the classic texts available so far; because paradoxically enough, Bitcoin is strictly speaking not quite late in the book, which can almost lead the reader who was expecting to read a simple plea for Bitcoin to rest the book after the first chapters, then that the main questions and developments will actually concern and question the notions of money, growth, modes of government rather than simple Bitcoin, all from a libertarian angle, largely inspired by and in the right lineage authors like Ludwig van Mises and Friedrich Hayek, economists of the so-called Viennese economic school, that is the Austrian Economic School.
But in fact, by choosing to focus his argument on the more specifically monetary aspects of the economy in general, and Bitcoin in particular, Mr. Ammous is aiming for and striking hard.
The Prologue is written by Nassim Nicholas Taleb, known for his series of books Incerto, questioning the notions of our relationship to uncertainty, the cognitive biases that affect us in such a situation, our tendency to underestimate the amplitude of a rare but possible negative consequence (what he calls the Black Swan), as well as the possibility of the existence of a so-called "antifragile" state, which could define Bitcoin, that is to say something that does not only to be reinforced by everything that attacks it.
The last ten years, during which Bitcoin continued its development and expansion, despite the various attacks of which it has been the subject, may seem t
o prove him right.
MNN Taleb then explains what will be the central element of the book: the distinction between healthy money and manipulable money, especially by governments, through various criteria that it considers essential, including the fact that a healthy currency must be at the same time commercially attractive on the temporal, spatial and on various scales. So, to make good money, it must be easy to transport, easy to keep and preserve, easy to use for all types of transactions.
The first chapters serve primarily as an introduction to the very notion of money, and the detail of the now-classic triad that a monetary object must attain in order to be recognized as such: to be at the same time a store of value, a medium of exchange and a unit of account. Mr. Ammous gives many examples throughout history of the necessity of the changeover to a common currency to make trade and civilizational expansion more free than through the ancient barter, notably for example the famous stones of Ray ( Ray Stones). Mr. Ammous then goes on to demonstrate that what prefigures the use and preservation of a currency is in fact what he calls his stock-to-flow ratio, which must be high: in short, the The resource used must be sufficiently rare and difficult to produce to maintain its value. It gives several historical examples of populations whose currencies were greatly devalued when an external participant could disrupt the initial money market by drowning it under a "copied" flow of money produced at a lower cost (the author cites, in particular, the case of populations in France). Latin America and Africa relying on shells as a monetary base, drowning in a stream of worthless shells produced on an industrial scale by other foreign players).
The following takes us to the era of the first so-called metallic coins: the arrival of gold at the time, particularly byzantine and Roman empires. The author then presents the phenomenon of "clipping" which consisted for a government to recover the coins already in circulation to recast them into new units devalued in gold, a very literal representation of the process of inflation. According to Ammous, as long as these empires were in a dynamic of conquest, it was possible to make illusion, but when it was no longer the case, the fall was tough, and relatively fast.
The periods of the Renaissance and Belle Epoque are then presented for illustrative purposes to demonstrate that each time a civilization has relied again on a gold standard, the healthiest form of currency that is for the author, because it is non-sovereign, this civilization has undergone extensive expansion and commercial, economic and cultural development.
In contrast to this ideal gold standard and its societies living in a supposed harmony, Mr. Ammous shows the striking contrast for these same societies when they had turned their backs on the gold-standard and they they had become converted to the state's fiduciary money, leaving them in the grip of the various monetary crises, which he often attributed to the inflationary tendencies never denied by the various governments of modern Western societies in particular. This economic situation is then presented as in direct connection with the regressions of individual freedoms: the inflationary fiduciary currencies would coincide with the periods of devaluation of various state fiduciary currencies, the various wars and the multiple authoritarian regimes having wr
itten History in the blood.
One of the fundamental principles defended in this book is the principle of time preference: the more an individual is able to postpone obtaining a reward, the more he will be inclined to put aside and therefore capitalize, and that is the capacity for the accumulation of this capital (both monetary, temporal and human) that would really condition individual freedom and the possibility of human progress, both from a commercial and a social point of view.
For Ammous, capitalism as a dilapidating society is fundamentally flawed, like saying "it is necessary to choke to breathe". In his eyes, it is obvious that it is precisely the capacity to postpone the limited immediate reward that allows investment and therefore evolutions in the future.
Also discussed is the concept of Zero to One and One to Many in the field of innovation, which can be summarized as follows: it is much more difficult to reach the capital point of the initial creation of an invention (the passage from nothing to something, so the creation of Bitcoin concerning us), than to succeed then to obtain its widespread adoption (the notion of hyperbitcoinization). The implicit assertion being that since Bitcoin is now created, the hard part is already done.
Mr. Ammous will also portray in the continuity of his book his libertarian vision of a theory of information and the economy in which, very clearly, the conventional conceptions are at best rejected, at worst they take for their rank: Marxists as well as Keynesians are referred back to back in their role not as factors of individual liberty but as invasive managers of the life of every citizen living under their hegemony. Keynes is also cut to pieces throughout the book, and one of the main criticisms that is addressed to him (but it is far from being the only one) is that his notion of growth, as an aggregation of the total expenditure which would necessarily have to be constantly increased in a continuous forward flight, can only be a factor of ruin and misery, leading the fiduciary societies to disaster, in its present form.
The fact is that for the author, the fiduciary currencies are in fact only the toy of the governments, capable of self-financing by the debt and by the infinite extension of the money supply, not bearing the risks and the costs of such measures as to their helpless citizens.
As examples of the manipulability and low value of fiduciary currencies, there are two elements: first, that although these currencies are supposed to have replaced gold, central banks are still in a frantic race to increase their holdings of gold. respective reserves of this gold; and also that fiduciary currencies are also diverted to be used as weapons in a global monetary war where each one tries to weaken the other competing governments vis-à-vis its own currency: what Mr Ammous calls nationalism monetary.
After these reflections on the world economic state, the author will look at both the notion of digital currency, to make a difference between what would be a simple digital fiduciary money and what is Bitcoin: a decentralized currency free and uncensored, and especially rare.
It is this notion of absolute rarity, put in parallel with the total number of 21 million bitcoins that will never be exceeded, that makes the author say that Bitcoin will be established as a store of value. . It is then its free and uncensored character which will assure it a central role in a new form of individual sovereignty made only possible by this type of money, and it is finally a combination of all its qualities (among which the antifragility) which would enable it to become the new standard of the international monetary system and its new unit of account, non-sovereign and borderless.
Also covered at the end of the book are the questions of the environmental impact of mining considered a fair price to the adoption of a healthier monetary system, the non-modifiable nature of Bitcoin and the core of its protocol, as well as various questions such as the presentation of a few risky situations that could potentially compromise Bitcoin, the secondary and derisory character of alt-corners (ridiculed as bringing back Humanity to the time of barter in terms of efficiency), as well as to finish off current attitude of some entrepreneurs and some governments who defend the idea "Blockchain not Bitcoin" against any logic, again according to Mr. Ammous.
In conclusion, "The Bitcoin Standard" is a book-reference for who is already a Bitcoin enthusiast, and can pretend to become so for any other curious, for a public at ease with English however.